A fiRm's Stock Has a Required Return of 10

question 303

Multiple Choice

A firm's stock has a required return of 10%. The stock's dividend yield is 6%. What is the dividend the firm is expected to pay in one year if the current stock price is $40?

• A) $2.00
• B) $2.40
• C) $2.80
• D) $3.20
• E) $3.60

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Definitions:

Labor Input

This denotes the amount of work effort, measured in hours or the number of employees, used in the production of goods and services.

Techniques of Production

The various methods and technologies used in the process of producing goods and services.

Firm's Costs

The total expenses incurred by a company in the production and sale of goods or services, including fixed and variable costs.

Diminishing Marginal Returns

The principle that as the quantity of an input increases, the additional output generated from that input eventually decreases.